There is some really useful technology here for the hobby autopilot: automatic control gain tuning. I hope to someday try to get something like this working. So far, the tricky part has been coming up with a "linear-enough" system model.

Coupled PID would work very similarly, to loosing a wing for example, if properly tuned. No live tuning of the parameters is needed, really, just the initial tuning. The problem with coupled PID is that they're very hard to tune - at least by hand - since 6 separate coefficients need to be optimized and every coeff affects the other. Automatic tuning of PID is very interesting subject and after that's achieved on the amateur level more complex control loops like coupled PIDs can be introduced as well. Maybe this'd be a future project for the ArduPilot development team? ;P

This is something I'm very interested in. Does the controller have a discrete set of possible known faults or does it just re-learn its model constantly? How quickly can it detect a fault? I think this fault tolerant stuff is where UAV research (and a lot of practical control applications in general) is heading. Very interesting and very important.

Ed:
The controller looks at the inputs it is putting into the system and the outputs that result. It generates a mathematical model that maps the inputs to the outputs. When the wing falls off, the system immediately notices that the existing model no longer matches the input to the output, and it re-computes the model. It is all very quick.

I agree, this is very important stuff for both the hobby-level and the full-sized aircraft level.